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New Business Model for Multi-Service 5G Transport Networks

Written by Huawei Technologies Co., Ltd.

15 November 2018 @ 16:14

GSMA forecasts that, by 2025, the number of global 5G connections will reach 1.1 billion, with one third of the world’s population connected to 5G networks. As the 5G industry matures, 5G will enable the connectivity and digitalization of everything. As a result, the operator market will also extend from individuals and homes to industries, an area that will integrate further with ICT.

5G Will Bring About Deeper Connections, Extending the Operators’ Value Chain and Forming a New Business Model

The future operator network is oriented towards 5G, supporting new services such as enhanced mobile broadband (eMBB), ultra-reliable and low-latency communications (URLLC), and massive machine-type communications (mMTC). This meets the requirements of different services in terms of bandwidth, latency, and intelligence, allowing 5G networks to develop more and connect everyone with everything. The B2C domain is set to evolve from mere video towards making our personal lives digital. The B2H domain will further develop digital entertainment and smart homes through fixed wireless access (FWA), and the B2B domain will gradually penetrate to the key vertical industries. Of these, B2H FWA will be the first to put 5G into commercial use. While the B2C domain allows for quick monetization, it also poses the biggest challenge to operators, and the business model may need to change, especially in terms of brand, service model, and charging metrics. B2B industry applications will become a key territory for operators’ mid- and long-term success, as business restructuring and innovation in vertical industries takes center stage.

To support a wide range of new 5G services, service diversification is required on the same network. Differentiation and balance are vital, especially in terms of mobility, number of connections, E2E latency, reliability, mobile data volume, service deployment time, and energy efficiency. As the pipe and information highway for 5G networks, transport networks needs to be intelligent to meet the special requirements of 5G services. The challenges of high bandwidth, low latency, complex connections, time synchronization, fragmentation, and intelligent O&M faced by 5G transport networks require smooth evolution, quick adaption to make intelligence and cloudification a reality. In general, as 5G services and value chains evolve, traditional operators are gradually building a converged and multi-layered business model with connections as the basis. The concept of multi-layered monetization takes shape in terms of connectivity (connections, mobile edge computing, and slicing), platforms (IaaS and data platforms, such as IoV and video surveillance), integration (one-stop industry integration), and operations (E2E operations services, such as unmanned aerial vehicles and VR). From the perspective of the relationship between solution and device providers and operators, the network construction of 5G transport networks will change inevitably as the operators’ business concepts change.

Multi-Service 5G Scenarios Help Develop Transport Networks and Make Cooperation More Flexible

When it comes to more flexible evolution of transport networks, instead of through pure network hardware-based construction, functions can now be added and expanded through software DevOps. In traffic-driven scenarios, the capacities of transport networks used to be expanded based on pipes only. To adapt to operators’ future multi-layered and converged business models, the evolution of transport networks needs to be more flexible. To be able to connect seamlessly with operators from the aspects of new requirements respond, new scenarios adaption, and joint innovation, a software-centric operations mode must be built to implement operations in DevOps mode.

In terms of how transport networks handle service-oriented procurement, in new 5G service scenarios, the industry applications are evolving. Operators need to conduct trial and error tests and joint innovation to find the most cost-efficient methods and make profits fast. To be able to respond quickly to uncertain requirements, procurement has to shift from one-off transactions to service-based purchases. In order to adapt to this change, transport networks, as smart pipes, need to optimize and innovate this mode of procurement in terms of traffic model, scenario classification, and value sharing. Traditional one-stop purchases may end up being replaced by installments and dispersed purchases, depending on models and service capabilities, including traffic models, scenarios, value packages, Subscription and Support (SnS), and Right to Use (RTU).
When transitioning to a multi-layered and converged business model, operators need to match various services in accordance with connection, platform, integration, and operations modes. Therefore, the transaction and charging modes also change a lot. Operators need to provide end users with periodic leases or subscription services to support the operations-oriented business model. The means of cooperation between transport networks suppliers and operators will change accordingly. In B2B2C mode, periodic leases and subscription services may be implemented synchronously. This requires operators and their partners to build a comprehensive and long-term strategic partnership and requires operators to recognize the value of their partners’ long-term services.

A New Business Model Is Required

The business model for multi-service bearing needs to adapt slowly to be compatible with 5G application scenarios and the extension of operators’ value chains. Essentially, a new multi-layered business model needs to be built.

New Business Model for Multi-Service 5G Transport Networks

Business models emphasize the fact that customer value, resource capability, and profit model have to match. Unlike traditional transport networks, multi-service 5G transport networks are changing profoundly in terms of customer selection, value proposition, internal and external resources, cost, and profitability. In terms of the representation of the business model, multi-service 5G transport networks will evolve in terms of transaction mode, delivery content, and delivery mode.

• Evolution of value proposition, profit model, and transaction model
For networks to be cloud-based, intelligent, and elastic, multi-service transport networks have to make network features and scenario classifications both software-based and perceivable, thereby decoupling software and hardware. To make users aware of the value of network slicing, multi-service bearing, low latency, and intelligence, transport networks may have to sell resources and capabilities. For example, with the Internet of Vehicles, the value proposition of intelligence, low latency, and high reliability is packaged into a network slice, and an independent profit structure is designed in the value proposition.

Transaction modes are also becoming more diversified. RTU, permanent license and SnS, subscription, and SaaS modes can be implemented between device providers and operators to share benefits, costs, and risks. Furthermore, new B2B2C models can be developed to allow everyone to benefit from opportunities in the 5G industry.

RTU is an authorization mode used to sell hardware capabilities in installments, such as capacities, ports, and frequencies. Operators can purchase ports and capacities on demand to reduce initial investment and achieve the goal of environmental protection.

The license/SnS and subscription modes convert operators’ OPEX into smooth annual expenses. They can enjoy software upgrades and upgrade services provided by vendors in a timely manner. This reduces network risks, improves service quality, and resolves routine problems with network operations and maintenance.

• Extending delivery modes and content to more specialized fields

5G features require that transport networks be in place before 5G can be deployed commercially. 5G also requires the presence of multi-service bearing, scenario-specific application, elasticity, and separate purchasing. On transport networks, operators will be able to carry multiple services, including wireless services, B2B private lines, and fixed network services. Scenario-specific slicing support can also be implemented. The bearer channel must be elastic enough to implement on-demand resource allocation for performance, latency, and reliability. Delivery content can also be corrected quickly based on the annual fee mode, and new features and requirements can be imported. Service modes and delivery content will extend to more comprehensive and specialized service fields to integrate with operators’ platforms, data, and industry integration, as well as provide more accurate management, control, and data analysis services. To provide specialized services, transport networks need to be simple and more intelligent. This requires a core brain engine that is driven by business intent. The engine can match changes in the delivery content and mode based on transport networks. The engine, together with business intent and network infrastructure, forms a closed-loop system, or in other words, an Intent-Driven Network. The engine must be equipped with management, control, and analysis capabilities. Specifically, the engine must be programmable, model-driven, and capable of implementation control, open APIs, cloud-based architecture, data analysis, and AI.

The continuous evolution of various elements of the new business model can facilitate operators’ investment. Moreover, through joint service innovation with operators, transport networks providers can achieve rapid service deployment in the 5G market.

Prospects of the New Business Model

The multi-service bearing business model will continue to evolve alongside operators’ multi-layered and converged business model, revitalizing the innovation and implementation of new 5G services. The 5G industry will also continue to develop, as will its business requirements, and industry application scenarios will emerge and mature. Meanwhile, service innovation in the 5G field will diversify, new metrics for value measurement will emerge, and multi-party stakeholders will gradually form.
In this context, multi-service transport networks will become flexible, converging to achieve cloud-and-network synergy. The new business model will provision features as services and eventually become the foundation of 5G in the future.

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